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Consumer protection: Dealers charged in used-car sting

Published June 6, 2014

Hidden-camera investigation found sellers failing to disclose extra fees and former wrecks

Just when you thought it was safe to go used-car shopping, the Automobile Protection Association (APA) and CTV’s W5 revealed the results of another hidden-camera investigation of industry practices.

The results are grim: just two of 21 Toronto-area auto sellers represented their vehicles properly — a record low number.

The findings led to charges being laid by the Ontario Motor Vehicle Industry Council (OMVIC) against six dealers and five individuals for failing to comply with advertising and disclosure regulations.

Swift action by the industry watchdog is a welcome development this year.

The APA’s secret shoppers visited 21 car sellers in the GTA to see just how good the used-car deals, advertised online and in print, held up under scrutiny.

The most serious concern raised by the investigation reveals a shoddy inspection program that is supposed to have government oversight.

Any vehicles deemed write-offs after a bad collision and repaired for resale must pass a structural inspection carried out by garages specially licensed to do so (this is in addition to standard safety certification).

But the vehicles the APA team examined for sale included some former wrecks that should never have passed the structural inspection — cars so bad that they may imperil their next owners.

“I don’t think, in Ontario, that you can trust a rebuild standard to say that you bought a good car,” APA president George Iny told W5. He called the current situation “appalling” and warned consumers they can’t have faith in Ontario’s oversight.

A case in point is a 2012 Mazda 3 that the APA had shopped. They found the steering column cover on the floor — a sign that the airbags had been deployed — and obvious frame damage poorly concealed by black tar. Red-painted components on a black car indicated the frame had been pieced back together with parts from a donor vehicle.

“It was repaired by a butcher,” Iny noted, while the camera showed one front tire three fingers away from the fender, and the opposite tire more than four fingers away. It could not be driven straight down the road.

The dealer selling the Mazda readily admitted that every car on his lot had been in an accident, which explained the low prices, but claimed that none had suffered frame damage. In fact, the APA determined that each of the models they examined on his lot had suffered extensive collision damage.

The APA documentation chronicling the low-priced Mazdas, Toyotas, Hondas and Volkswagens the team shopped in the GTA contains a litany of false claims, poor disclosures and half-truths spouted by salespeople hawking formerly good cars haphazardly patched together.

Equally distressing, the investigation also revealed that new-car dealers may also dabble in vehicles that have been repaired after a collision.

Dean Myers Chevrolet on Dufferin St. in Toronto advertised a 2007 Mercedes-Benz E350 4Matic sedan for $27,995. The sales rep repeatedly claimed that the model had never been in a collision.

Not true. The APA expert determined every body panel on the right side had been repaired, indicating the Mercedes had been hit. When asked to put the no-accident claim in writing, the salesperson offered to write only that CarProof showed no accidents.

It’s an important distinction: many collisions are not disclosed on auto history reports because the previous owner never reported the accident and repairs were done without the insurance company’s knowledge. The next owner bears the brunt of the problems.

Conventional wisdom dictates that new-car dealers have first dibs on trade-ins and won’t put questionable accident vehicles on their used-car lots. Unfortunately, consumers can no longer assume that paying a premium for a used car at a branded dealer will always exempt them from ending up with a problem vehicle.

Other new-car dealers identified by the APA were charging administration, inspection and emission-testing fees over and above the advertised price — in clear violation of the Motor Vehicle Dealers Act.

All-in pricing is now required in Ontario, yet many dealers, new and used, continue to demand fees of up to $695 on top of the advertised price. Buyers shouldn’t be paying them.

“Only four out of the 16 dealers we visited had real all-in pricing,” Iny says.

The APA-W5 report also included five “private sales” that were actual businesses — usually autobody shops — trying to sell repaired vehicles as personal cars.

“Four of the five curbsiders had dealer connections,” Iny says, explaining curbers are a well-used sales channel for the worst vehicles.

Despite the dismal results of this year’s investigation, Iny says the vehicles at many dealerships appeared to be in better overall condition, and used-car dealers offered more professional presentations than in the past.

Thanks to the industry’s new disclosure rules — which also apply to buyers trading in their vehicles — some of the worst used vehicles have been banished from dealer lots.

But, as the APA discovered, some doesn’t mean all.

Used-car Shopping Tips

  • Some used-car dealers tend to under-report collision damage, so always arrange an independent inspection of the vehicle prior to payment.
  • “Don’t be a price junkie,” Iny advises, suggesting that the lowest-priced examples of the car you want are likely flawed and should be avoided.
  • CarFax, CarProof and AutoCheck history reports recognize rebuilt or salvaged vehicles, but may not disclose collision repairs the previous owner arranged privately.
  • Insist that the dealer walk around the car with a paint meter, which will instantly reveal body panels that have been repainted.

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